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Trade protection leads to recessions in the long run – Bank of Canada researcher

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Central Banking Newsdesk

16 May 2019

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Protectionist policies between two countries lead to a recession in both countries in the long run, a researcher from the Bank of Canada finds.

In the paper, Yuko Imura examines the effects of three trade-restricting policies on global value chains and production. The policies she looks into are tariffs on final-good imports, tariffs on intermediate-input imports and barriers to accessing foreign markets.

While all three lead to recessions in the long run, the relative effects on the GDP of